Albertsons, Safeway deal advances

Pamela Riemenschneider
The Packer
April 07, 2014

The $9.4 billion deal between Safeway and Albertsons owner Cerberus Capital Management is a step closer after no other bidders emerged for the Pleasanton, Calif.-based chain.

The deal would make the combined chain the second largest in the U.S., with 2,400 total stores.

Cincinnati-based Kroger Co. has 2,600, but it could be Kroger Co. that benefits from this deal, especially in markets where Safeway and Albertsons overlap the most, said Pewaukee, Wis.-based retail analyst David Livingston.

“Competitors like Kroger and WinCo could not be happier,” he said. “Kroger will probably be the biggest winner in this whole deal. No one shopped Safeway or Albertsons because of price, quality or service, but more that they were an acceptable alternative for convenience shopping. Kroger will pick up that business from disgruntled customers with all the overlap.”

Safeway and Albertsons, particularly in California where they had the most overlap, were underperformers in their market, he said, typically 20% or more below market average in sales per square foot.

“I expect Safeway sales to decline about 15%, which is normal when a below average operator takes over another below average operator,” he said.

Store closures are inevitable where the companies overlap, particularly in California, Arizona, Dallas and other markets in the West.

“Cerberus has had a long time to develop their plan and should breeze through FTC hearings,” he said. “Just like the last big Cerberus acquisition of Albertsons, we saw stores sold or closed by the bushel.”

- See more at: http://www.thepacker.com/fruit-vegetable-news/Albertsons-Safeway-deal-ad...

The $9.4 billion deal between Safeway and Albertsons owner Cerberus Capital Management is a step closer after no other bidders emerged for the Pleasanton, Calif.-based chain.

The deal would make the combined chain the second largest in the U.S., with 2,400 total stores.

Cincinnati-based Kroger Co. has 2,600, but it could be Kroger Co. that benefits from this deal, especially in markets where Safeway and Albertsons overlap the most, said Pewaukee, Wis.-based retail analyst David Livingston.

“Competitors like Kroger and WinCo could not be happier,” he said. “Kroger will probably be the biggest winner in this whole deal. No one shopped Safeway or Albertsons because of price, quality or service, but more that they were an acceptable alternative for convenience shopping. Kroger will pick up that business from disgruntled customers with all the overlap.”

Safeway and Albertsons, particularly in California where they had the most overlap, were underperformers in their market, he said, typically 20% or more below market average in sales per square foot.

“I expect Safeway sales to decline about 15%, which is normal when a below average operator takes over another below average operator,” he said.

Store closures are inevitable where the companies overlap, particularly in California, Arizona, Dallas and other markets in the West.

“Cerberus has had a long time to develop their plan and should breeze through FTC hearings,” he said. “Just like the last big Cerberus acquisition of Albertsons, we saw stores sold or closed by the bushel.”

- See more at: http://www.thepacker.com/fruit-vegetable-news/Albertsons-Safeway-deal-ad...

The $9.4 billion deal between Safeway and Albertsons owner Cerberus Capital Management is a step closer after no other bidders emerged for the Pleasanton, Calif.-based chain.

The deal would make the combined chain the second largest in the U.S., with 2,400 total stores.

Click here to read more at The Packer.


Be the first to comment

Please check your e-mail for a link to activate your account.
Get Advice Join TDU Donate

Recent News

More Coli Corruption Fallout in Chicago

In the wake of John Coli's indictment on the charge of taking employer payoffs, Illinois Joint Council 25 has dumped his hand-picked replacement Becky Strzechowski and appointed Terry Hancock as Joint Council 25 president. 

John Coli Indicted!

Hoffa's man in Chicago, John Coli was hit with a federal indictment today, charged with taking payoffs of $100,000 from a Chicago employer and using the power of the Teamsters Union to line his own millionaire pockets.

View More News Posts